Internal friction (Q^-1) of nickel sheets highly deformed up to an equivalent strain (ε) of 4.8 by the Accumulative Roll-Bonding (ARB) process was investigated in order to clarify the damping mechanism of the ultrafine-grained materials produced by severe plastic deformation. Although the strength increased with increasing number of the ARB cycle (N), the maximum value of Q^-1 was obtained at N=4 (ε=3.2). At relatively small ε about 1, where dislocation cell structure was formed, relatively small Q^-1 below 5×10^-3 was obtained. The dislocations within the cell walls appeared to be tightly pinned at high density of nodes or other dislocations. In the middle range of ε, where the ultrafine grains having diameter lager than 0.2 μm were formed, a high valued of Q^-1 greater than 5×10^-3 was obtained. In the ultrafine grains, dislocations without the pinning by nodes or other dislocations were observed. At the largest ε of 4.8, where the grain size was as small as 0.15 μm, the Q^-1 was smaller than 4×10^-3. The distance of the dislocation motion under vibration stress seemed to be small due to the fine grain size. The change in the Q^-1 with number of the ARB cycles was attributed to the changes in the dislocation density and the distance of dislocation motion under vibrating stress which is controlled by the pinning points and the grain boundaries.